Travel industry confident of riding out woes, expects strong rebound in H2

The Spring Festival holiday is usually a peak season for the travel industry in any year, but the unexpected novel coronavirus epidemic this year has forced most people to stay at home and travel agencies are bearing the brunt of its impact.

Industry leaders though are confident that travel demand will rebound strongly once the crisis is over.

It was estimated that 450 million Chinese people would travel during the weeklong holiday this year. But most travelers canceled their trips to prevent possible infection from the virus due to exposure in public spaces.

On Jan 24, China officially suspended domestic and overseas group tours. It also suspended sales of certain travel products such as flight tickets and hotel bundle packages. Those who have booked their orders earlier should be able to cancel their trips without being charged any processing fees, according to the Ministry of Culture and Tourism.

Last year, the travel sector in China achieved total revenue of 6.5 trillion yuan ($933 billion), meaning it generated 17.8 billion yuan of revenue daily, the China Tourism Association said.

Fliggy, Alibaba's online travel service provider, said travel orders for the Spring Festival holiday this year were 30 percent higher than last year. The outbreak of the contagion has caused 70 to 80 percent cancellations of orders.

"The Spring Festival holiday has been the hottest time for travel in China, and it is far more popular than summer and the National Day holiday periods. The volume of travel product orders was huge. Now, the cancellation volume is huge too," said Huang Yuzhou, vice-president of Fliggy.

"We have guaranteed a full refund for all of the flight and hotel orders globally before Feb 29, and travelers will be able to cancel the orders themselves easily online," Huang said.

So far, at least 14 domestic carriers such as Shenzhen Airlines, Xiamen Air and Sichuan Airlines said they will refund the cancellation processing fee back to travelers. At least 52 foreign airlines are allowing free cancellation or rebooking under certain conditions.

Fliggy said it believes the epidemic is a crisis, but it also can be seen as a potential opportunity, and the whole travel industry will start to boom again after the outbreak is over.

Trip.com Group, China's largest online travel agency, is also confident that travel demand will pick up significantly after the epidemic.

"The large number of canceled orders doesn't mean they have disappeared. They are just being delayed. I believe after the coronavirus outbreak is over, there will be a remarkable increase in travel product bookings," said Sun Jie, CEO of Trip.com Group.

"This is a challenging time for China. We stand by our customers and established a 200 million yuan disaster relief fund to reach out to those who have paid for their travel packages since some airlines and hotels have restrictions on refunds," she said.

Trip.com Group said the travel demand is expected to come up again strongly after the contagion is over, given the experiences during the SARS outbreak in 2003.

When SARS was finally put under control, the company saw travel demand double or even triple and it is confident the same thing will likely happen in the Chinese economy and the travel industry.

Caissa Touristic is a Beijing-based travel agency and a major organizer of group travels overseas. The company said it has received a large number of flight cancellation notices from airlines such as British Airways and Lufthansa since Jan 29, a time when most travel groups who departed before the coronavirus outbreak were about to finish their trips and return to China.

The stoppage of flights to China has made it particularly difficult for the company to help arrange changes to other flights for its customers as it involved a large number of travelers and families.

Caissa is working on ensuring family members can take the same flights. Despite the extra amount of work, the travelers have been able to return to China smoothly.